Bitcoin (CRYPTO: BTC) on Tuesday displayed its volatile abilities to the newest market participants with a sharp and sudden downturn.
What Happened: Bitcoin, according to TradingView data, fell by nearly 19% from the day’s high of nearly $53,000 to a low of under $43,000. CoinMarketCap data shows that most of the crash happened in mere minutes and coincided with an uptake in trading volume.
Tuesday also marks the first day Bitcoin became legal tender in El Salvador, the first country to adopt the crypto as a national currency.
A Bitcoin futures liquidations chart shows that as of Sept. 6, $3.22 billion worth of long positions were liquidated, nearly 1,700% up from the previous day. Long-term indicators such as the Puell Multiple, MVRV Z-Score and Total Supply Held by Long-Term Holders all sing a bullish song for those who are not short-term traders to dance to.
A Fibonacci retracement from Bitcoin’s high of nearly $65,000 as of April 14 to its low of $28,600 shows that Bitcoin broke the 0.618-level resistance located at $51,000 on Monday, but this level failed to work as a support. When this key level was lost, Bitcoin breached though the 0.5 Fibonacci level at under $47,000 and bounced off near the 0.382 level located at about $42,500.
As of press time, Bitcoin regained the 0.5 level and trades at just over $47,000.
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Why It’s Important: The importance of the $51,000 price level cannot be understated. This price area acted as both a support and resistance in the past and a Sept. 5 Binance order book analysis showed it also was an area with a much more significant than usual concentration of orders.
The 0.382 Fibonacci level at $42,500 is also of great importance as it also closely corresponds to the nearest low of about $43,000 to the coin’s all-time high reported on Feb. 28.
As usual, Bitcoin acted as the crypto market’s trendsetter. Ethereum (CRYPTO: ETH) is trading at $3,479 after losing over 11% over the last 24 hours. Similarly, the ever-popular Dogecoin (CRYPTP:DOGE) lost over 15% and trades at $0.2608.
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